Current Awareness in Aging Research (CAAR) Report #559 -- October 21, 2010

CAAR (Current Awareness in Aging Research) is a weekly email report produced by the Center for Demography of Health and Aging at the University of Wisconsin-Madison that helps researchers keep up to date with the latest developments in the field. For more information, including an archive of back issues and subscription information see:

1. HEALTH AND RETIREMENT STUDY UPDATE: The University of Michigan, Institute for Social Research HRS has announced: "Cross-Wave Tracker File" (October 2010). "Tracker files are named for the most recent interview wave covered in the file. Structurally, the October 2010 Tracker 2008 Final Version 1.0 retains all the information contained in the December 2009 Tracker 2008 Early Version 1.0, with a few additions, including weights."

2. INTEGRATED PUBLIC USE MICRODATA SERIES (UNIVERSITY OF MINNESOTA) CURRENT POPULATION SURVEY UPDATE: On Oct. 13, 2010, IPUMS-CPS announced: "The IPUMS-CPS project) is pleased to announce the addition of the 2010 Annual Social and Economic Supplement (ASEC) public-use file to the data series. The database now includes the March supplements from 1962 onwards and adds several sources of data that must otherwise be merged manually at considerable effort: the replicate weights for more precise variance estimation; the experimental alternative poverty measures created by the Census Bureau; and the summary enhanced health insurance variables created at the University of Minnesota's State Health Access Data Assistance Center, which are available only in IPUMS-CPS."

5. US AGENCY FOR HEALTHCARE RESEARCH AND QUALITY REPORT: "Improving Patient Safety in Nursing Homes: A Resource List for Users of the AHRQ Nursing Home Survey on Patient Safety Culture" (most recent update June 2010, HTML and .pdf format, 20p.).

7. US DEPARTMENT OF HEALTH AND SOCIAL SERVICES, OFFICE OF THE INSPECTOR GENERAL REPORT: "Medicare And Medicaid Fraud And Abuse Training In Medical Education" (OEI-01-10-00140, October 2010, .pdf format, 8p.).

Abstract:

Forty-four percent of medical schools reported providing instruction to students on Medicare and Medicaid fraud and abuse laws in 2010. Furthermore, more than two-thirds of institutions offering residency and fellowship programs reported instructing participants on compliance with Medicare and Medicaid fraud and abuse laws in 2010.

Medicare and Medicaid fraud and abuse cost U.S. taxpayers billions of dollars each year and put the programs' beneficiaries' health and welfare at risk. No current law requires medical schools or hospitals offering physician residency or fellowship programs to provide instruction on compliance with Medicare and Medicaid laws aimed at preventing fraud and abuse. OIG has dedicated significant resources to promoting the adoption of compliance programs and encouraging health care providers to incorporate integrity safeguards into their organizations as an essential component of a comprehensive antifraud strategy.

Among the Federal statutes addressing fraud and abuse are the civil False Claims Act, the anti-kickback statute, and the physician self-referral statute. For this report, we surveyed all accredited allopathic and osteopathic medical schools and institutions offering physician residency and fellowship programs to determine the extent to which they provided instruction on compliance with these three laws.

We found that about two-thirds of the medical schools that provided instruction specifically reported covering the False Claims Act, the physician self-referral law, and the anti-kickback statute. Over three-quarters of the institutions that provided instruction reported covering these laws. Almost all medical schools and institutions offering residency and fellowship programs are interested in receiving OIG-provided instructional materials relating to Medicare and Medicaid fraud and abuse.

Opportunities exist for OIG to provide additional educational materials addressing these topics. OIG plans to (1) prepare educational materials appropriate for medical schools and institutions offering residency and fellowship programs, (2) distribute the materials to those medical schools and institutions that sponsor residency and fellowship programs, and (3) seek feedback from the medical schools and institutions offering residency and fellowship programs on ways to improve the materials. Such feedback could include emerging compliance challenges that physicians, hospitals, and other providers face.

16. INTERNATIONAL LONGEVITY CENTRE UK REPORT: "The Spending Review 2010: Intergenerational Perceptions of Fairness, Cuts and Economic Recovery," by Dylan Kneale, Craig Berry and David Sinclair (October 2010, .pdf format, 15p.). Link to full text is at the bottom of the page.

26. BOSTON COLLEGE CENTER FOR RETIREMENT RESEARCH: "Asset Cycles and the Retirement Decisions of Older Workers," by Jan Ondrich (WP 2010-13, October 2010, .pdf format, 56p.). Links to an abstract and full text are available at:

We examine the long-run relationship between fertility, mortality, and income using panel cointegration techniques and the available data for the last century. Our main result is that mortality changes and growth of income per capita account for a major part of the fertility change characterizing the demographic transition. The fertility reduction triggered by falling mortality, however, is not enough to overcompensate the positive effect of falling mortality on population growth. This means that growth of income per capita is essential to explain the observed secular decline of population growth. These results are robust against alternative estimation methods, potential outliers, sample selection, different measures of mortality, and the sample period. In addition, our causality tests suggest that fertility is both endogenous and exogenous. In particular, we find that an increase of fertility reduces growth of income per capita.

A. "The Effects of the Financial Crisis on the Well-Being of Older Americans: Evidence from the Cognitive Economics Study," by Matthew D. Shapiro (WP 2010-228, September 2010, .pdf format, 34p.). Links to an abstract and full text are available at:

B. "The Joint Labor Supply Decision of Married Couples and the Social Security Pension System," by Shinichi Nishiyama (WP 2010-229, September 2010, .pdf format, 46p.). Links to an abstract and full text are available at:

D. "The Effects of the Economic Crisis on the Older Population," by Michael Hurd and Susann Rohwedder (WP 2010-231, September 2010, .pdf format, 21p.). Links to an abstract and full text are available at:

Financial literacy and schooling attainment have been linked to household wealth accumulation. Yet prior findings may be biased due to noisy measures of financial literacy and schooling, as well as unobserved factors such as ability, intelligence, and motivation that could enhance financial literacy and schooling but also directly affect wealth accumulation. We use a new household dataset and an instrumental variables approach to isolate the causal effects of financial literacy and schooling on wealth accumulation. While financial literacy and schooling attainment are both strongly positively associated with wealth outcomes in linear regression models, our approach reveals even stronger and larger effects of financial literacy on wealth. Estimated impacts are substantial enough to suggest that investments in financial literacy could have large positive effects on household wealth accumulation.

B. "Policy Options for State Pension Systems and Their Impact on Plan Liabilities," by Joshua Rauh and Robert Novy-Marx (w16453, October 2010, .pdf format, 30p.).

Abstract:

We calculate the present value of state pension liabilities under existing policies, and separately under policy changes that would affect pension payouts including cost of living adjustments (COLAs), retirement ages, and buyout schedules for early retirement. Liabilities if plans were frozen as of June 2009 would be $3.2 trillion if capitalized using taxable municipal curves, which credit states for a possibility of default in the same states of the world as general obligation debt, and $4.4 trillion using the Treasury curve. Under the typical actuarial method of recognizing future service and wage increases, liabilities are $3.6 trillion and $5.2 trillion using municipal curves and Treasury curves respectively. Compared to $1.8 trillion in pension fund assets, the baseline level of unfunded liabilities is therefore around $3 trillion under Treasury rates. A one percentage point reduction in COLAs would reduce total liabilities by 9-11%, implementing actuarially fair early retirement could reduce them by 2-5%, and raising the retirement age by one year would reduce them by 2-4%. Even relatively dramatic policy changes, such as the elimination of COLAs or the implementation of Social Security retirement age parameters, would leave liabilities around $1.5 trillion more than plan assets under Treasury discounting. This suggests that taxpayers will bear the lion's share of the costs associated with the legacy liabilities of state DB pension plans.

C. "Portfolio Allocation for Public Pension Funds," by George Pennacchi and Mahdi Rastad (w16456, October 2010, .pdf format, 51p.).

Abstract:

This paper presents a dynamic model of a public pension funds choice of portfolio risk. Optimal portfolio allocations are derived when pension fund management maximize the utility of wealth of a representative taxpayer or when pension fund management maximize their own utility of compensation. The models implications are examined using annual data on the portfolio allocations and plan characteristics of 125 state pension funds over the 2000 to 2009 period. Consistent with agency behavior by public pension fund management, we find evidence that funds chose greater overall asset liability portfolio risk following periods of relatively poor investment performance. In addition, pension plans that select a relatively high rate with which to discount their liabilities tend to choose riskier portfolios. Moreover, consistent with a desire to gamble for higher benefits, pension plans take more risk when they have greater representation by plan participants on their Boards of Trustees.

Despite its importance for the analysis of life-cycle behavior, stock ownership by households is poorly understood. Among other approaches to the investigation of this puzzle, recent research has elicited the expectations of stock market returns by individuals. This paper reports findings from a study that collected data over a two-year period both on stock market expectations (subjective probabilities of gains or losses) and on stock ownership. On average stock market expectations are much more pessimistic about gains than the historical record of actual gains. Expectations are heterogeneous, and they are correlated with stock ownership. Over the two years of our data, stock market prices increased, and expectations of future stock market price changes also increased, lending support to the view that expectations are influenced by recent stock gains or losses.

E. "The Medical Care Costs of Obesity: An Instrumental Variables Approach," by John Cawley and Chad Meyerhoefer (w16467, October 2010, .pdf format, 41p.).

Abstract:

This paper is the first to use the method of instrumental variables (IV) to estimate the impact of obesity on medical costs in order to address the endogeneity of weight and to reduce the bias from reporting error in weight. Models are estimated using data from the Medical Expenditure Panel Survey for 2000-2005. The IV model, which exploits genetic variation in weight as a natural experiment, yields estimates of the impact of obesity on medical costs that are considerably higher than the correlations reported in the previous literature. For example, obesity is associated with $676 higher annual medical care costs, but the IV results indicate that obesity raises annual medical costs by $2,826 (in 2005 dollars). The estimated annual cost of treating obesity in the U.S. adult non-institutionalized population is $168.4 billion or 16.5% of national spending on medical care. These results imply that the previous literature has underestimated the medical costs of obesity, resulting in underestimates of the cost effectiveness of anti-obesity interventions and the economic rationale for government intervention to reduce obesity-related externalities.

B. "Implications for Retirement Wellbeing of Financial Literacy and Planning," by Annamaria Lusardi and Olivia S. Mitchell (WP2010-26, October 2010, .pdf format, 37p.). Links to an abstract and full text are available at:

C. "Pension Plan Distributions: The Importance of Financial Literacy," by Robert L. Clark, Melinda S. Morrill, and Steven G. Allen (WP2010-27, October 2010, .pdf format, 23p.). Links to an abstract and full text are available at:

E. "Financial Illiteracy and Stock Market Participation: Evidence from the RAND American Life Panel," by Joanne Yoong (WP2010-29, October 2010, .pdf format, 36p.). Links to an abstract and full text are available at:

F. "Fees, Framing, and Financial Literacy in the Choice of Pension Manager," by Justine Hastings, Olivia S. Mitchell, and Eric Chyn (WP2010-30, October 2010, .pdf format, 26p.). Links to an abstract and full text are available at:

G. "Investor Knowledge and Experience with Investment Advisers and Broker-Dealers," by Angela A. Hung, Noreen Clancy, and Jeff Dominitz (WP2010-31, October 2010, .pdf format, 47p.). Links to an abstract and full text are available at:

31. INSTITUTE FOR THE STUDY OF LABOR (IZA) [UNIVERSITY OF BONN, GERMANY]: "What Do Unions Do to Pension Performance?" by William E. Even and David A. Macpherson (Discussion Paper No. 5256, October 2010, .pdf format, 35p.). Links to an abstract and full text are available at:

Using data from the 2005 Canadian Community Health Survey, the current study expands on previous research on the healthy immigrant effect (HIE) in adult populations by considering the effects of both immigrant and visible minority status on health for males and females in mid- (45- 64) and later life (65+). The findings indicate that the HIE applies to recent immigrant men in midlife; that is, new male immigrants - those who immigrated less than 10 years ago - have better health compared to their Canadian-born counterparts, and that the effect is particularly strong for visible minorities. The picture is similar for older women who have recently immigrated, however this advantage largely disappears when a number of socio-demographic, socio-economic, and lifestyle factors are controlled. For older men and middle-aged women of color, however, the reality is strikingly different: both groups report health disadvantages compared to their Canadian-born counterparts, with both recent and longer-term midlife women having poorer health. Findings are discussed in terms of their implications for health care policy for immigrant adults.

36. AMEDEO MEDICAL LITERATURE: Note: "AMEDEO has been created to serve the needs of healthcare professionals, including physicians, nurses, pharmacists, administrators, other members of the health professions, and patients and their friends. They can easily access timely, relevant information within their respective fields... All AMEDEO services are free of charge. This policy was made possible thanks to generous unrestricted educational grants provided by AMGEN, Berlex, Eisai, Glaxo Wellcome, Novartis, Pfizer, Roche, and Schering AG."

37. SPRINGER PUBLISHING MONOGRAPH: End of Life: Nursing Solutions for Death with Dignity, by Lynn Keegan and Carole Ann Drick (2010, 272p., ISBN: 9780826107596). For more information, including ordering information, see:

41. US SENATE COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS, SUBCOMMITTEE ON HOUSING, TRANSPORTATION, AND COMMUNITY DEVELOPMENT HEARING PUBLICATION: "Modernizing Affordable Housing for Seniors and People With Disabilities," a hearing held Oct. 29, 2009, Senate Hearing 111-468, ASCII text and .pdf format, 56p.).

42. US SENATE SPECIAL COMMITTEE ON AGING HEARING PUBLICATION: "The War on Drugs Meets the War on Pain: Nursing Home Patients Caught in the Crossfire," a listening session held Mar. 24, 2010, Senate Hearing 111-611, ASCII text and .pdf format, 131p.).

It is not by muscle, speed, or physical dexterity that great things are achieved, but by reflection, force of character, and judgement; and in these qualities old age is usually not only not poorer, but is even richer